global presence evolved from early export sales through their
two seaboard branches. Here is the story........
The Early Export Sales
Dr. Lawrence Northcote Upjohn, cousin of the founder and first
President of Upjohn Company W. E. Upjohn, was named branch
manager of the New York Branch in 1906. At that time, the few
export sales that were made came from the two seaboard branches,
New York and San Francisco. The San Francisco office was asked
to promote and accept orders from the Far East, in particular
the markets in China and India. Upjohn set up a London agency in
the 1890’s, which was serviced from the New York office. The
London agency (John Timpson & Company) wrote orders from several
European countries. In addition to the London agency, L. N.
hired salesmen to cover the Latin American markets. While in New
York, L.N. devoted a great deal of time and effort to the export
sales. He experienced minimal success as the foreign buyers
could not create demand for products without extra discount, and
they expected long term credit. L. N. wrote, “This was
troublesome for the home office and seemed to be unprofitable.
As a result the home office reluctantly complied with request
for foreign goods from New York and San Francisco, but to say
the least they passively discouraged export business.”
The home office attitude towards export sales was about to
change. In 1931, L.N. Upjohn succeeded W. E. Upjohn as President
and became The Upjohn Company’s second president. He served as
president until his retirement in 1953. During his tenure and
after World War II, he traveled around the world and met with
sales employees and agents to assess the needs and potential of
each countries market. In 1948, he wrote a detailed and
voluminous report of his travels. Many parts of his report were
reproduced in the Company’s monthly in house magazine, The
Overflow. The following is a document about the early export
salesmen. The author and date of this typewritten document is
There are references in the Overflow volumes to sales offices
in Mexico, Cuba, and Puerto Rico during the 1920s, and to
several traveling salesmen in Central and South America. Typical
of the "international salesman" was Ernesto Inderbitzen, a Swiss
who spoke Spanish, French, German, and Italian, plus a number of
Mexican-Indian dialects. Hired in 1926, Inderbitzen became
senior salesman in Mexico after weathering natural disasters and
a revolution. He first worked out of the Kansas City branch,
which apparently handled the northern Mexico export business
from around 1925 to 1930.
By the mid-1930s, Upjohn salesmen were regularly detailing in
Panama, Ecuador, Venezuela, and Central America. The hours were
long, the conditions often primitive, but the worst part of the
job was the slowness of communication. Salesmen on extended
trips didn't receive news from home--or their paychecks--for
months at a time.
In the 1930s, the San Francisco office began actively to explore
sales to the Far East. There was already some activity--in 1929,
there is reference to an Upjohn agent in Tokyo, for
instance--and the branch had had a sales office in the Hawaiian
Islands for many years. In 1931, Tse Wei Wu of Shanghai was
engaged as an Upjohn representative to China, opening the door
to a potentially enormous market. Wu, intelligent and strikingly
handsome, was equally at home in a Western suit or traditional
Chinese robe and fan. He carried the Upjohn name through his
offices in Shanghai and Hong Kong for many successful years, and
even visited Kalamazoo; however, it was discovered that he was
manufacturing his own pharmaceuticals and affixing the Upjohn
label to them, causing Upjohn's China business to collapse
In October 1931, San Francisco
arranged for the T.M. Thakore Co. of· Bombay to become the
company's sole representative for India, Burma, and Ceylon. This
resulted in a successful relationship for many years, until the
partition of Pakistan brought it to a halt in 1952.
By the mid-1930s, Upjohn salesmen
also were being assigned to the "Philippine Islands territory."
Closer to home, the history of Upjohn selling in Canada is a
long and illustrious one. Upjohn pharmaceuticals had undoubtedly
been exported to Canada beginning in 1927, but the company's
active sales presence began in earnest when Malcolm Galbraith
was named director of sales in 1929. Galbraith, a Canadian by
birth, set up a Toronto branch in 1935. This was Upjohn's first
foreign sales branch.
fully staffed export office had been gradually developed in the
basement of the administration building on Henrietta Street, and
in 1950 was moved to larger permanent quarters at the Portage
Road plant, with Mr. Henry B. Roberts as export sales manager,
and Mr. Robert Boudeman as office manager.
indicated by the Company’s desire to become more active in the
ever- increasing world trade the export office became a division
of the Company. Effective January 1, 1950, the Export Division
became the Company’s tenth division. Eight people were
transferred to the new division. They included Manager R.S.
Jordan, Louie Cinabro, Bob Collins, Tony Dacoba, Dale Finch, Bob
Hiler, LaVerle Hinkson, Nancy LaMieux, and Lou Ann Rineholt.
The Export Division was the first break from all other domestic
functions and responsibilities. General Manage Jordan reported
to Executive Vice-President C. V. Patterson. Bob Hiler, Head of
the Department of Planning and Inventory Control, reported to
Jordan. All other Department Heads reported to R. M. Boudeman,
Office Manager. Department of Traffic and Shipping was Eugene
Badger. Bob Collins headed the newly created Accounting
Department for the Export Division. Harley Hieney became head of
Price Determination and Catalogs Department. Because of the
vast differences between domestic business and doing business in
multiple foreign countries, the Export Division was to become
totally independent and separated from all other functions and
responsibilities within the Company.
From Export to
the sales and demand for Upjohn products in the foreign markets
increased, there would be significant changes in the
organizational structure of the Export Division within the next
ten-year period. As indicated above, Canada was Upjohn’s first
foreign branch. In 1952, Canada and England where the first
wholly-owned foreign subsidiaries of TUC; however, they were
joined by subsidiaries in Australia, Belgium, Brazil, Colombia,
France, Italy, Japan, Mexico, Philippines, South Africa, and
Venezuela later in the same decade. TUC was well on its way to
becoming a global company.
E. Gifford Upjohn, president, announced in December 1957 there
were to be major operational changes in the Export Division.
Effective January 1, 1958, three new domestic subsidiaries were
to be organized necessitated by the continued growth of the
company’s export business. The domestic subsidiaries are
designed to meet the growing demands of Upjohn products abroad,
as well as to increase flexibility of international operations
in meeting special marketing problems in each of the export
markets. As recommended by the Chicago based law firm, Baker
McKenzie, the three subsidiaries were;
Upjohn International Inc.
This original name of this company was Upjohn International
Operations Inc. A management service company, based in
Kalamazoo, served as headquarters for all foreign subsidiary
corporations. Management functions and staff activities formerly
carried out by the Export Division were taken over by this
management company. Eventually the staff functions offered
technical assistance in the fields of accounting, advertising,
auditing, engineering, legal and tax, financial, and medical
services production, product development, sales education,
market research and planning, inventory control, personnel,
veterinary activities, and management assistance. The number of
employees grew from 57 to 126 by December 1965. In February
1985, there were 270 employed by Upjohn International Inc.
Under the U.S. Internal Revenue Code, all the expenses of the
management company were deemed to be for the sole benefit of the
foreign subsidiaries and therefore not deductible in the U. S.
All the expenses of Upjohn International Inc were allocated to
the foreign subsidiaries; hence, their income always equaled the
expenses of this company. As some foreign jurisdictions resisted
these “technical service charges” creative ways to collect the
charges became a challenge.
The first officers of Upjohn International Inc. were; R.S.
Jordan, president; E.H. Coleman, executive vice president; R. M.
Boudaman, executive vice president; H. R. Roberts, vice
president; J. A. Braun, vice president; R D. Tedrow, secretary
and R. W. Collins, treasurer. Succeeding presidents were R. M.
Boudeman, R. D. Tedrow, Dan Witcher, Selvi Vescovi and Leigh
This company, which was also headquartered in Kalamazoo, was
organized to handle trade within the Western Hemisphere except
in those countries where Upjohn operated subsidiaries such as
Canada, Brazil, and Mexico. Initially Upjohn Inter-America
operated sales branches in Panama, Peru, Puerto Rico, and
Venezuela. In later years, Canada, Dominion Republic, and
Ecuador were added as branches. Officers in this corporation
were Jordan, president; Tedrow, secretary; and Collins,
Under the U. S. Internal Revenue Code this company would qualify
as a Western Hemisphere Trade Corporation. In order to encourage
trade in the Western Hemisphere, qualifying companies would be
taxed at three-fourths of the regular tax rate. The corporate
tax rate at the time was 52%, thus, initially Upjohn
Inter-American profits were taxed at a rate of 39%
This company had its headquarters in Panama with a branch in
Hong Kong and, “was set up to take title to and normal
control of, certain new overseas companies or investments. Its
operation will simplify the use and transfer of capital and will
meet certain tax situations more equitably. The company was
under the direction of Eugene Badger.” The main function of
Upjohn Overseas was to distribute Upjohn products to the foreign
subsidiaries throughout the world. It operated in Panama’s “free
trade zone,” meaning that there were no tariffs. Panama imposed
a 3% income tax on the inter-company profit of Upjohn Overseas
and for several years the U. S. did not impose any tax on their
off-shore profits. For several years, they were able to invest
97% of their capital in new subsidiaries rather than at 48% in
later years. The officers in this new corporation were Jordan,
chairman of the board; Eugene N. Badger, president; Boudeman,
vice president; Tedrow, secretary; and Collins, treasurer.
The End of Upjohn International Inc.
Although there were numerous personnel changes during the 1970’s
and 1980’s, the organizational structure of Upjohn International
Inc. remained intact. As the International sales continued to
grow and became a larger portion of Upjohn’s worldwide sales,
additional foreign subsidiaries and branches were organized. By
the mid-1980’s, there were sixteen pharmaceutical manufacturing
plants and four chemical manufacturing plants in foreign
countries (not including Puerto Rico). In addition, there were
distribution centers in four countries.
Beginning in 1991, the International Division, as it was known,
was beginning to be dismantled. Staff functions were being
integrated with the parent company. With the merger of Pharmacia
in 1995, the three domestic subsidiaries were phased out and the
foreign subsidiaries were eliminated or merged into Pharmacia’s
foreign affiliates. All that remained was the corporate shell of
Upjohn International Inc.
Manufacturing in Puerto
Although the Puerto Rico manufacturing facilities were not part
of the International division’s responsibilities, it was an
integral part of the company’s foreign operations.
1970, the Company determined that due to increased demands for
lincomycin and clindamycin, they would invest in a new plant
outside the Kalamazoo area. The last fermentation expansion in
Kalamazoo was in 1966. R.M. Boudeman stated, “At that time we
recognized we were sitting on top the largest single antibiotics
production complex on one site in the world. If anything
happened to it, the effects would be crippling. As an insurance
against such a disaster, we decided that we had to, have a
second plant somewhere away from Kalamazoo.” The company
acquired land in Omaha, Nebraska, and announced that in 1971
they would invest in new facilities, “above $10 million that
will greatly increase our capacity to produce antibiotics”.
that time other manufacturing companies, especially
pharmaceutical companies, were making major investments in
manufacturing facilities in Puerto Rico. For some fifty years,
the U.S. Internal Revenue Code had exempted manufacturing
profits for products that were produced in a U. S. Possession
territory. (Note: The law was first enacted to encourage U. S.
industries to invest in the Philippine Islands, a U. S.
Possession at the time.) The incentive was limited for most
companies in that U. S. Possessions imposed a local tax at
roughly the same rate as the U. S. corporate rate, and
furthermore the U. S. would impose a tax on the repatriated
profits. In the late 1950’s, Puerto Rico enacted a law that
would exempt from tax all approved locally manufactured
products. “Operation Boot Strap,” as the law was called,
attracted many pharmaceutical companies.
When Upjohn management began to explore the Puerto Rican
alternative, it was determined that to make the same capital
investment in fermentation facilities in Puerto Rico as was to
be made in Omaha the investment would not be worthwhile.
Primarily because of the much higher cost of utilities in Puerto
Rico the cost to ferment products was 20%/25% higher, which
would negate the tax benefits. With the assistance of Lee,
Toomey, and Kent, a Washington DC based law firm, it was
determined that more of the manufacturing process done in Puerto
Rico, the greater the tax benefit.
Management decided to invest in a full-fledged pharmaceutical
operation, i.e., fermentation facility, chemical extraction and
processing plant, and a pharmaceutical finished goods plant. In
the fall of 1971, R. M. Boudeman announced in San Juan, Puerto
Rico, “A $30 million pharmaceutical plant is to be built by The
Upjohn Company about 30 miles west of here”-Barceloneta.
Two U.S. corporations were formed to produce products in Puerto
Rico. In 1972, Upjohn Manufacturing Company (UMC) became the
worldwide supplier of Cleocin and Lincocin products. In 1975,
Upjohn Manufacturing Company-M (UMC-M) became the worldwide
supplier of Motrin. The companies operated in Puerto Rico at
pretty much full capacity until Pfizer, Inc. abandoned the
property in 2003.
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